Market Beat Europe - FY 2025

INVESTMENT ACTIVITY

Hotel investment in Europe gained momentum in 2025, exceeding €27 billion, significantly up from the previous year (+23%) and 28% above the last 10-year average. The transaction activity was underpinned by a rebound in landmark single-asset transactions (+27% year-on-year) alongside continued momentum in large pan-European portfolio deals (+13%). Private investors led the activity, accounting for 52% of acquisitions and 42% of disposals. Transaction volumes experienced a significant shift in investor source markets compared to 2024, with strong growth from Europe and APAC investors.

PRIME YIELDS

Following decompression in 2023, yields remained generally stable in 2025, with values further supported by growing income and minor compressions for the “best of the best” deals in markets with high entry barriers. The average price per room in Europe reached €202,124, representing a growth of 8.4% year-on-year. Private investors led the market, accounting for 52% of all transactions. Institutional investors are also re-emerging, representing 36% of buyers, supported by improved access to capital and lower financing costs.

SUPPLY & DEMAND

Hotel demand in Europe grew across all regions in 2025, despite ongoing geopolitical headwinds (+5% vs 2024), while supply increased at a slower pace (+3.3%).  Global arrivals rose by 3.8%, mainly driven by a strong rebound in Central and Eastern Europe (+6.2%), followed by Western Europe (+5.0%). Moreover, the increase in hotel room nights sold surpassed the pace of international arrivals, signaling a combination of longer average stays and healthy domestic demand. With ongoing conflicts and continued disruption to long-haul travel, demand has built up and is being redirected toward Europe. This has translated into particularly strong business on the books for Southern European regions.

PERFORMANCE

In 2025, Europe’s average RevPAR reached €107, a year-on-year increase of just over 2%. This growth was driven by a 1.2% rise in ADR and a 0.8% gain in occupancy. Despite this progress, recovery remains incomplete. Average occupancy levels across Europe remained approximately 1.5 percentage points below pre‑pandemic benchmarks of over 72% in 2019, despite ADR exceeding pre-pandemic levels by around 33.5%. Some of the largest year-on-year increases in RevPAR in 2025 were seen in Bulgaria (+13%) and in Lithuania (+12%).